European Shares Seen Flat To Higher
European stocks may open a tad higher on Thursday as investors continued to sell the euro amid reports that policymakers were starting to become uncomfortable with the common currency’s recent appreciation.
ECB’s chief economist Philip Lane said the euro-dollar rate “does matter” for monetary policy – suggesting the bank might do something about it.
Asian markets are trading mostly higher, with Chinese and Hong Kong stocks edging lower after the United States said it would now require senior Chinese diplomats to get State Department approval before visiting U.S. university campuses or meeting local officials.
The State Department said it would also take action to help ensure all Chinese embassy and consular social media accounts were “properly identified.”
On the data front, the recovery in China’s service sector activity extended into a fourth straight month in August, an industry survey showed today, but the corresponding PMI slipped to 54.0 from July’s 54.1.
Elsewhere, activity in Japan’s services sector contracted at a faster pace in August for the first time in four months.
Final Purchasing Managers’ survey data and retail sales figures from euro area are due later in the session, headlining a busy day for the European economic news.
Across the Atlantic, reports on weekly jobless claims, the U.S. trade deficit and service sector activity may attract attention, although trading activity could be somewhat subdued ahead of the closely-watched monthly jobs report on Friday.
The Japanese yen slipped marginally after Chief Cabinet Secretary Yoshihide Suga announced his candidacy for the ruling Liberal Democratic Party’s presidential election, formally entering the contest to succeed Shinzo Abe as the country’s next prime minister. Gold edged up slightly while oil held steady near multi-week lows on worries about fuel demand.
U.S. stocks posted strong gains overnight after Treasury Secretary Steven Mnuchin suggested to lawmakers that the Trump administration might be open to a stimulus package as large as $1.5 trillion.
On the economic front, payroll processor ADP reported much weaker than expected private sector job growth in August while the Federal Reserve’s Beige Book noted economic gains were modest over the past several weeks.
The tech-heavy Nasdaq Composite rallied 1 percent and the S&P 500 climbed 1.5 percent to reach fresh record closing highs, while the Dow Jones Industrial Average jumped 1.6 percent.
European markets rallied on Wednesday as the euro pulled back from a two-year high in reaction to fairly upbeat manufacturing data from across the world and amid optimism about potential coronavirus vaccines.
The pan European Stoxx 600 gained 1.7 percent. The German DAX spiked 2.1 percent, France’s CAC 40 index surged 1.9 percent and the U.K.’s FTSE 100 added 1.4 percent.
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